Budget 2023
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Nene likely to revise GDP to 1.5% - Investec

Cape Town - Finance Minister Nhlanhla Nene's first mini budget (Medium Term Budget Policy Statement) is likely to contain revisions of the country's fiscal debt, growth, inflation and debt forecasts, as well as hints on potential tax changes, Investec said on Monday.

Investec economist Annabel Bishop predicted Nene would cut National Treasury's February forecast of year-on-year GDP growth of 2.7% to 1.5%.

She added this had been expected, but meant the minister had to guard against government's direct debt rising as Moody's rating agency had warned South Africa risked a further downgrade if it was allowed to escalate in an unsustainable manner.

"Should the Medium Term Budget Policy Statement deliver higher net debt ratio projections, or fiscal slippage with the fiscal deficit projected to reach 3.0% of GDP after 2016/17, then SA could receive a further credit rating downgrade, which would then cause the rand to weaken closer to our down case."

But Bishop said communication from Treasury ahead of Wednesday's mini budget had signalled a commitment to fiscal efforts to avoid this scenario.

Bishop said as the 2014/15 financial year reached its halfway mark, government spending was slightly higher than budgeted compared to 2013/14, and revenue collection somewhat lower.

It was therefore expected that Nene could give some information on potential future tax changes.

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